Process and Enterprise Maturity

CIOs don't typically lead corporate transformation, but they're well positioned to help guide business process and improvement changes, says Michael Hammer, original champion of the business reengineering movement. Hammer labels the CIO the enterprise's c

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This audit is embedded in something you call the Process and Enterprise Maturity Model, a tool that helps companies plan and manage business transformations. Please explain PEMM.

HAMMER: There are two parts to it. One is the maturity of your enterprise. The other is the maturity of individual processes.

The first thing you do is set up the maturity of your enterprise. There are four things you look at there. Do you have knowledgeable, committed leadership at the executive level? Do you have a corporate culture that supports process? Do you have institutionalized expertise in the organization? Do you have a governance mechanism for managing process projects?

You use the model to identify any gaps and weaknesses. If you have them, you need to address them, because you won't get anywhere on your process without that.

That'll lead you, for instance, to say, "Gee, I need to strengthen my leadership." Then you, the CIO, would deal with your executive team, educating them, communicating with them, getting them to understand the problems that poor-performing processes lead to and so on.

Once you've made progress in understanding where you are enterprisewide, you can begin to use the process part of it—namely, looking at individual processes and asking yourself: Do we have owners for them? Do we have designs? Do we have metrics and so on? That gives you a plan for how you go about filling those gaps.

How and what exactly do you measure? That's always one of the toughest things for corporations to figure out. As you pointed out in previous works, a lot of companies do that poorly.

HAMMER: Yes. Metrics are a big problem because most metrics are functional, historical and financial. Those aren't the kind of metrics we need. We need real-time, or at least current, metrics, we need end-to-end process metrics, and we need metrics that measure much more than financial performance, but things like speed, customer satisfaction, quality and the like.

I wrote an article for the Spring 2007 [MIT] Sloan Management Review called "The Seven Deadly Sins of Performance Measurement and How to Avoid Them." It provides some guidance on how to develop metrics.

Basically you need to identify your key strategic business goals and which of your processes impact those goals.

So, for example, being first to market with new products is a strategic goal; the processes that impact that are things like product development. Speed or product development becomes the key metric you have to focus on to achieve your strategic objective. That's a real crude summary of what that article suggests.